Business Design: Business Thinking + Design Thinking
You’ll often see Design Thinking described using three overlapping circles — User Desirability, Technical Feasibility and Business Viability — with a strong emphasis on the user circle, or at least some sense of all things flowing from that circle.
That’s what we at Peer Insight often describe as the "user-centric mindset" that DT brings to any table. Further, our sense is that for DT to be used as a means to innovation you have to leverage that user-centricity, as well as other principles of design (visualization, prototyping, iteration, etc.), in exploring key questions inside of all three circles. This is where there are often breakdowns. This is also why firms specialize. Not doing this is why Bruce Nussbaum declared Design Thinking dead.
I think more and more organizations are recognizing that and are expanding their thinking to the other circles. Lean and Agile methods are great for developing (including testing and iterating on) a minimum viable product as efficiently as possible, which gets us to technical feasibility. However, none of these methodologies set us up well to explore at this early stage the classic viability challenges that one faces when launching a new business. Sure enough, many innovation projects consider the viability questions way later when considering whether to fund a commercial lunch – i.e. What do the projections look like? Ok, green light… or red. But these are imaginary numbers at best, informed by current market truths rather than future possibilities. We see value in those Monte Carlo simulations, but not at this stage with pre-venture funding initiatives.
So, how do we consider all circles simultaneously and parallel prototype a new customer experience and a new business model? Perhaps we combine the principles of business with those of design. Business Thinking plus Design Thinking. Business Design. Business Design then as a term implies that we use some of the designer’s toolkit - say, human-centric creative problem solving (as Rotman posits) - to consider business problems. The key questions are not separate from those for the user, but seem to sit on top of those around the customer experience (what it does for them, and how it’s delivered to them).
If we look at the business model in a human-centered way, the humans central to our expanded set of questions aren’t just end-users, though those are of course important (especially if they’re paying customers), but now also channel partners, suppliers, funders and other third party partners. You lay out the key business assumptions — e.g. revenues will exceed costs at scale, customers will pay a price that allows us to hit organizational targets, we can incentivize partners to engage in delivery in a way that protects value to us — then you apply the same principles. You prototype. You experiment. You build upon what you learn.
I've been designing and running experiments to test business model viability for a couple of years now and am recognizing that it fills a gap for any emerging business opportunity and actually expedites the journey to market. (Evidently, it's much more time consuming to go to market with a misguided business model and have to refine it within those live constraints.) While it might be extremely tempting to go to market with the simplest model for expediency's sake, that leaves so much potential value on the table - to your organization, to users, to partners — I hope you'll push first for maximizing value in every direction and second efficiency. It's incredibly powerful to co-create your business model with partners and users.
So, Design Thinking and Lean ensure we start and stay human-centered for “desirability.” Lean and Agile get us to “usability.” Agile gets us to “feasibility.” Business Design gets us to “viability.” All of these get us and our new venture to market. I think it’s pretty amazing what Business Design is offering intra- and entrepreneurs alike. What do you think?
- Clay Maxwell (@bizinovationist)